Theresa McEndree

Frequent redemption opportunities key to loyalty program success: study

As customer loyalty programs proliferate, brands are having to work harder and become more responsive to their customers if they hope to retain them.

One thing many customers want is more redemption opportunities, results of a survey conducted by global fintech Blackhawk Network reveal. Blackhawk Network interviewed more than 1,500 American adults, summarizing their findings in the ebook A Heart-to-Heart About Increasing Loyalty

Blackhawk Network vice president of marketing Theresa McEndree said successful loyalty programs are those producing frequent engagement between the consumer and the brand. Think “earn and burn”, where customers have regular opportunities to amass point through transactions and special offers where they earn extra points for buying specific product combinations, for example. 

They should also have more opportunities to redeem their points (the “burn”), Ms. McEndree said. Blackhawk’s research discovered members in loyalty programs with banks, phone companies, utility companies, online retailers and brick-and-mortar retailers preferred redeeming their reward points for prepaid and gift cards at values under $100. In some instances companies have seen greater than a 200 percent increase in customer engagement by offering both physical and virtual gift cards.

Ms. McEndree said customers approach loyalty programs from two angles.

“There’s accessible and aspirational. Customers may prefer to redeem their points every three to six months or save up for a new TV.”

Many of us like to frequently treat ourselves with little rewards throughout the year, especially if we participate in programs in the food and beverage, online retail, gyms and retail sectors, where roughly 90 percent redeem their points at least once per year and a majority do so at least four times per year. Only those participants in airline and hotel chain loyalty programs wait until they have amassed $100 in rewards before redeeming them.

“Our findings suggest that retailers and organizations can increase consumer engagement with their loyalty program by simply offering the right rewards at the right values,” Ms. McEndree said.

While digital cards are increasingly popular, plastic gift cards still reign, Ms. McEndree said.

“People love plastic gift cards. The physical element has higher value. People love the tangibility of plastic.”

But there is discernible growth in the desire for e-gifting or digital gifts as digital wallets and payment systems become better known. They contribute to the desirable omnichannel experience. Millennials are more comfortable with digital wallets but their overall potential across demographics will be muted until the industry educates people about what they are and how to use them.

“Technologists and marketers need to get together and figure out how to get the wallet more commonplace,” Ms. McEndree said.

As the digitization of the economy continues, exciting opportunities are available for loyalty programs, Ms. McEndree said. The use of gift cards on social media platforms is growing, as are their use as an extension of e-commerce strategies. For example Alipay customers traveling to the United States can use Alipay at select merchants and earn gift cards at other ones. It will soon be common for customers to transfer their points to an e-gift card in real time as they are standing in line at a checkout stand.

However you provide the rewards, make them frequently available so your customers stay engaged and not move on to one of the other five programs they are members of.

“What you are giving is something of additional value,” Ms. McEndree said. “It’s fun money that’s not in your bank account.”

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